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Impact of congestion charge and minimum wage on TNCs: A case study for San Francisco

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  • Li, Sen
  • Poolla, Kameshwar
  • Varaiya, Pravin

Abstract

This paper describes the impact on transportation network companies (TNCs) of the imposition of a congestion charge and a driver minimum wage. The impact is assessed using a market equilibrium model to calculate the changes in the number of passenger trips and trip fare, number of drivers employed, the TNC platform profit, the number of TNC vehicles, and city revenue. Two types of charges are considered: (a) a charge per TNC trip similar to an excise tax, and (b) a charge per vehicle operating hour (whether or not it has a passenger) similar to a road tax. Both charges reduce the number of TNC trips, but this reduction is limited by the wage floor, and the number of TNC vehicles reduced is not significant. The time-based charge is preferable to the trip-based charge since, by penalizing idle vehicle time, the former increases vehicle occupancy. In a case study for San Francisco, the time-based charge is found to be Pareto superior to the trip-based charge as it yields higher passenger surplus, higher platform profits, and higher tax revenue for the city.

Suggested Citation

  • Li, Sen & Poolla, Kameshwar & Varaiya, Pravin, 2021. "Impact of congestion charge and minimum wage on TNCs: A case study for San Francisco," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 237-261.
    • Handle: RePEc:eee:transa:v:148:y:2021:i:c:p:237-261
    DOI: 10.1016/j.tra.2021.02.008
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    Cited by:

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    2. Zhang, Kenan & Nie, Yu (Marco), 2022. "Mitigating traffic congestion induced by transportation network companies: A policy analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 96-118.
    3. Liu, Yang & Li, Sen, 2023. "An economic analysis of on-demand food delivery platforms: Impacts of regulations and integration with ride-sourcing platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    4. Jing Gao & Sen Li, 2023. "Regulating For-Hire Autonomous Vehicles for An Equitable Multimodal Transportation Network," Papers 2301.05798, arXiv.org, revised Oct 2023.
    5. Zheng, Yunhan & Meredith-Karam, Patrick & Stewart, Anson & Kong, Hui & Zhao, Jinhua, 2023. "Impacts of congestion pricing on ride-hailing ridership: Evidence from Chicago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    6. Shetty, Akhil & Li, Sen & Tavafoghi, Hamidreza & Qin, Junjie & Poolla, Kameshwar & Varaiya, Pravin, 2022. "An analysis of labor regulations for transportation network companies," Economics of Transportation, Elsevier, vol. 32(C).

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